How churning impacts returns

As investment avenues, mutual funds offer benefits like diversification and professional fund management, among others. However, these benefits come at a cost i.e. if you wish to invest in a mutual fund then you will have to bear the stipulated charges as well. For example, there are one-time charges like entry and exit loads; also annual (recurring) charges expressed in terms of the expense ratio are to be borne. Over longer time frames, these charges can have a significant impact on the returns clocked by the mutual fund. While there is no way to avoid these expenses, you can certainly rationalise them by investing in the right avenues and avoiding a frequent churn in your portfolio.

Simply put, churning the portfolio means buying and selling mutual funds frequently. This is the reverse of the recommended method of investing i.e. making investments and staying invested therein for the long-term. Investors generally churn their portfolios because they are advised by their mutual fund agent/advisor to do so; the agent often passes back to them a portion of the commission he earns as an incentive to induce the churn. Alternatively the desire to clock higher returns by investing in a better performing fund triggers a portfolio churn. Finally, there is this inexplicable urge in investors to invest in funds with lower net asset values (NAVs) or new fund offers (NFOs) that leads to a churn in the portfolio.

Whatever be the case, it should be understood that exiting one fund and subsequently reinvesting in another could involve additional costs in the form of exit load or entry load or in some instances both. And over the long-term these costs add up and have a detrimental impact on the returns.

The impact of portfolio churning

If your advisor advises you to frequently churn your mutual fund portfolio, then it is pertinent for you to be aware of the costs involved. A simple exercise entailing some calculations can help you quantify the negative impact of a portfolio churn. But before that, let us establish the ground rules for the exercise.

1. Decide the amount that you wish to invest and the investment tenure. For example, let's assume that you make an initial investment of Rs 100,000 for a 5-Yr period.

2. Then decide on the annual rate of return that you expect to earn from the investment. In this case, let's assume the rate to be 15.00% per annum.

3. Finally, account for the loads (entry and exit) that you will have to bear in the process of redeeming your monies from one fund and investing the same in another. Let's assume 2.25% as the total load (including both entry and exit loads).

Now for the calculation part. To quantify the impact of churning on returns, consider two options, A and B.

Option A: Investment grows without churning the portfolio

Compute the maturity value for the investment of Rs 100,000 at 15.00% per annum over a 5-Yr period. In this case, the portfolio is not churned at all throughout the investment tenure. As a result, the maturity value will be Rs 196,610.

Option B: Portfolio is churned once every year

In this case, the maturity value of the investment is computed, assuming that the portfolio is churned once every year (i.e. 5 times over a 5-Yr investment tenure). Of course, on account of the churn, loads will have to be borne in every transaction. Assuming the same rate of return, the maturity value will be Rs 179,502.

Churning leads to losses

Initial investment (Rs)	100,000
Load (includes entry and exit loads) (%)	2.25
Annual return (%)	15.00
Investment tenure (Yrs)	5
	Option A	Option B
Maturity value (Rs)	196,610	179,502
Savings (on account of no churn) (Rs)	17,108	-

The difference between Option A and Option B is Rs 17,108. This is the impact of churning the portfolio. Rs 17,108 can be termed as the additional amount earned by selecting Option A or as the loss incurred by selecting Option B.

It should be noted that while computing the impact of churning the portfolio, some crucial assumptions have been made, for example the rate of return on the investment. Now the same isn't necessarily fixed and is bound to fluctuate over a period of time thus impacting the result of the calculation. Also the number of times you choose to churn the portfolio is an individual choice. Finally, the entry and exit loads vary across funds and fund houses as well. Hence the likelihood of the actual result of the portfolio churn being different vis-à-vis the result displayed by the Churn Calculator cannot be ruled out. However, the Calculator will undeniably help you estimate the impact of frequently churning the portfolio.

In conclusion, the negative consequences of regularly churning the portfolio are undeniable. The onus to not get carried away by `motivated' sales pitches of the investment advisor and make an informed investment decision lies with you.

source: personalfn

How not to lose 2,296% returns

History is a great teacher for those who are willing to learn from it. And it is in history that we take recourse to understand whether mutual funds offer an attractive investment proposition at all. The learnings are an eye-opener.

Read on if you really want a wealthy future….

Numbers do not lie

Ultimately the benefit of an experienced fund management team and a disciplined approach to investing must reflect in the numbers over the long-term. A rational investor expects to earn the best return he can, given his appetite for risk and desire to hold a quality portfolio at all times. He is definitely not looking to invest in a well managed fund which is a perpetual laggard amongst its peers.

So, we decided to let the numbers do the talking. And to ensure that the numbers are meaningful, we have taken a sufficiently long period over which we have witnessed both bull and bear markets i.e. a 10-Yr period, starting 1997.

We identified the flagship equity schemes from all the Asset Management Companies (AMCs) that existed in 1997 for the purpose of this study.

Here are some startling numbers

An investment of Rs 100,000 in the BSE Sensex in October 1997 would be worth Rs 431,399 today

The same money invested in all the 14 flagship equity schemes, in equal proportion, would have returned Rs 984,512.

What this tells us is that an average equity fund outperformed the BSE Sensex by a significant margin over the last ten years.

But, averages mask reality

Let's be clear. Averages carry little significance as they cover up the reality of their components. An investor does not invest in 'all' schemes out there; he chooses what he thinks are the best funds. So depending on the investor's choice, the performance differential could vary from great to disastrous. And this is what a more detailed look at the numbers throws up.

Now, some shocking numbers

An investment in the best performing scheme of this group would have yielded a maturity value of Rs 2,599,757.

On the contrary, if you had invested in the worst performing scheme (which mind you was from a then respected fund house), the maturity value would have been only Rs 303,785.

That's a difference of Rs 2,295,972 i.e. 2,296% of the initial investment value!

If you doubt that this result is due to some clever selection of schemes, then read on for another stunning number. Take for instance the difference between the second-best and the last but one worst performing scheme. It was a stupendous Rs 1,879,666 i.e. 1,880% of the initial investment value!

How not to lose 2,296% returns

You now know that the cost of making a poor selection is very high. And you, an investor with long-term needs, cannot afford to make such mistakes. Especially if a mistake stands to lose you 2,296%!

To ensure that you do not lose out on an opportunity, this is what you can possibly do -

1. Become an expert yourself - since you are busy with your work, this is not a feasible option
   

2. Employ the services of an honest financial planner - to be honest, this is easier said than done. It is not impossible; but not easy either.
   

3. Get access to independent recommendations i.e. those that are not linked to commissions - given that this does not involve changing distributors, folio numbers et cetera, it seems to be the most feasible option.

source: Internal Research credit goes to study done by PersonalFN in '07

Crude witnesses another big rise

Prices cross the $45 mark almost after a month

Oil prices shot up once again on Thursday, 26 February, 2009. Prices continued to rise after energy department reported yesterday in its weekly inventory report that gasoline inventories dropped during last week. Prices also rose after OPEC spoke about another production cut in coming months earlier during the week.

On Thursday, crude-oil futures for light sweet crude for April delivery closed at $45.22/barrel (higher by $2.72 or 6.4%) on the New York Mercantile Exchange. Last week, crude ended higher by 3.8%.

Prices reached a high of $147 on 11 July, 2008 but have dropped almost 69% since then. Year to date, in 2009, crude prices are higher by 5%. On a yearly basis, crude prices are lower by 60%.

EIA had reported yesterday that U.S. gasoline consumption during the past four weeks rose 1.7% from a year ago. Gasoline inventories fell by 3.4 million barrels.

EIA had also reported yesterday that crude inventories rose by 700,000 barrels to 351.3 million during last week. Market had expected a rise of more than 2 million barrels. Total products supplied over the past four weeks, including gasoline, diesel and jet fuel, averaged 19.7 million barrels per day, down 0.8% from a year ago. Excluding jet fuel, total products supplied rose slightly.

Prices had been sliding since past couple of months after fear gripped the US economy that US banks might be nationalized.

OPEC has been trying to cut production consistently in order to step up prices from their current low levels. As per reports during the last weekend, Algerian Energy Minister Chakib Khelil said that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.

Against this background, March reformulated gasoline surged 11% to $1.3004 a gallon. Also in energy trading, March heating oil rose 4.6% to $1.2941 a gallon. Both contracts will expire at the end of trading on Friday.

Natural gas for April delivery added 1.2% to $4.077 per million British thermal units. EIA reported today that supply of U.S. natural gas in storage fell by 101 billion cubic feet in the week ended 20 February, 2009, less than expected. At a total of 1.895 trillion cubic feet, gas in storage stood higher by 233 billion cubic feet than at the same time last year and by 199 billion cubic feet above the five-year average.

Recently, Paris based, IEA has reported that this year's global oil demand will fall by 1 million barrels a day, or 1.1%, from last year. If realized, it will be the biggest yearly drop since 1982. The IEA cited a worsening economic outlook across all regions as the reason for the weakness in oil demand.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for March delivery closed at Rs 2,232/barrel, higher by Rs 121 (5.7%) against previous day's close. Natural gas for February delivery closed at Rs 206.9/mmbtu, higher by Rs 3.5/mmbtu (1.9%).

Gold rebounds in London trades as slide seen overdone

Yellow metal adds more than $10 as buying seen picking up amid continued turmoil in equities

Gold rebounded in the London trades today, after lingering in a tight range earlier in the day as traders bought the yellow metal on ideas that the recent slide that took around $60 off the benchmark COMEX futures in the last three sessions was overdone in the face of strong fundamentals.

The commodity went up for a low of $937.50 per ounce in Asia and currently trades at $ 953, down $10.40 per ounce after a sharp fall last night. The global equity markets continued to slip, making it possible for Gold to find a support around $940 per ounce mark on the COMEX

The US dollar continued to maintain a strong bias against the Euro even as worries over the US banking space continued to hold sway. Last week, ECB president Jean Claude Trichet warned that the euro zone's financial system is facing challenging times, as financial markets and the real economy are dragged in a downward spiral.

Major concerns are emanating on the Central and Eastern (CEE) economies in the Euro region and even as Germany has announced that it stands ready to protect the Eurozone if one of its member states found itself in such serious difficulty that it could not refinance its debt.

Dollar maintained its firm undertone after more evidence emerged on the vulnerability of the Central and Eastern Euro nations. The World Bank, the European Bank for Reconstruction and Development and the European Investment Bank issued a joint pledge Friday to provide up to 24.5 billion euros ($31.2 billion) in aid to support Eastern Europe's bank sector.

The greenback has been a beneficiary of the global risk aversion despite mounting problems on the US financials front and continued worries over the swelling budget deficit.

US short term treasuries have been in great demand from the global investors, as the falling yields indicate and 1.2500 looks likely to be tested in the Euro/dollar pair in case the economic outlook continues to deteriorate. The greenback currently trades at 1.2668 against the Euro, compared to 1.2750 earlier in the day.

MCX Gold futures went above Rs 15600 per 10 grams, hitting a high of Rs 15628 during the day. The April futures are trading up Rs 342 or 2.24% from the previous close with a massive 11% increase in the open interest.

source: Capital Market

News Flash

India Economy Grows at Slowest Pace Since 2003, Adds Pressure for Rate Cut India’s economy grew at the slowest pace since 2003 last quarter, adding pressure on the central bank to slash interest rates and support investment and consumption. Stocks extended declines and bond yields fell.

Rupee Slides to a Record Low on India's Junk Rating Risk, Economic Slump India’s rupee plunged to a record low on concern global funds will step up sales of local assets after Standard & Poor’s said it may cut the nation’s credit rating to junk and economic growth slumped to a five-year low.

Reliance Industries Plans to Acquire Petroleum Unit After Stock Declines Reliance Industries Ltd., owner of the world’s largest refining complex, plans to acquire the remaining shares of unit Reliance Petroleum Ltd., after the stock dropped 54 percent in the past year.

Tata Steel Profit Falls as Recession Curbs Demand From Car Manufacturers Tata Steel Ltd., India’s biggest producer, reported a 39 percent drop in third-quarter profit as the global recession sapped demand from car and appliance makers.

India Sugar Output to Drop More Than Forecast, Tightening Global Supplies India, the world’s second-biggest sugar maker, may produce 2 million metric tons less this year than previously forecast because of lower harvests in all the main growing areas, likely tightening global supply.

Sensitive Index Has Second Monthly Drop as India's Economic Growth Slows Indian stocks fell, with the key index posting its second monthly drop. Reliance Industries Ltd. led declines as the economy grew at the slowest pace since 2003 and missed economists’ estimates.

Bonds Gain a Second Day as Slowing Growth Increases Rate-Cut Speculation Indian bonds rose for a second day, pushing benchmark yields to a two-week low, as a slowing pace of economic growth fueled speculation the central bank will further slash interest rates.

U.S. Economy Shrank 6.2% in Fourth Quarter, Worst Performance Since 1982 The U.S. economy shrank in the fourth quarter at an even faster pace than previously estimated as consumer spending plunged, companies cut inventories and exports sank.

Citigroup Gets Bigger Government Stake in $25 Billion Swap; Shares Plunge The U.S. government ratcheted up its effort to save Citigroup Inc., agreeing to a third rescue attempt that will cut existing shareholders’ stake in the company by 74 percent. The shares fell as much as 48 percent.

U.S. Futures Slide on Worse-Than-Forecast GDP Data, Citigroup Rescue Plan U.S. stock futures declined as the government cut shareholders’ stake in Citigroup Inc. by 74 percent and a report showed the economy shrank at a faster pace than previously estimated.

General Motors Said to Need European Aid in Weeks or Opel May Be Insolvent General Motors Corp. plans to tell Germany and other European governments it needs 3.3 billion euros ($4.17 billion) in aid within weeks or it may run out of cash to run the Adam Opel GmbH unit, a person familiar with the matter said.

Hungary Wants $230 Billion European Union Aid Package for Eastern Europe Hungarian Prime Minister Ferenc Gyurcsany wants the European Union to arrange a package of as much as 180 billion euros ($230 billion) to help east European economies, banks and companies weather the financial crisis.

Roche, Chevron Lead Record Month of $22.6 Billion in Corporate Bond Sales Hewlett-Packard Co., the world’s largest personal-computer maker, and energy company Chevron Corp. led $22.6 billion of U.S. corporate bond sales this week, capping a record month for non-financial issuance as investors sought safety in investment-grade company debt.

Blackstone Has $827.1 Million Loss, Misses Estimates, on Buyout Writedowns Blackstone Group LP, the world’s biggest private-equity firm, had a fourth-quarter loss of $827.1 million as it marked down the value of private-equity and real estate holdings.

source: Bloomberg

ICICI Prudential MF declares dividend For QIP

Record date for dividend is 5 March 2009

ICICI Prudential Mutual Fund has declared dividend under the dividend option of ICICI Prudential Interval Fund II-Quarterly Interval Plan-D. The fund house has decided to distribute dividend upto 100% the distributable surplus of the scheme on the face value of Rs 10 per unit as dividend on the record date of 5 March 2009.

The scheme recorded a NAV of Rs 10.419 per unit under the retail option and Rs 10.4321 per unit under the institutional option as on 25 February 2009.

ICICI Prudential Interval Fund II - Quarterly Interval Plan-D is a debt oriented interval scheme with an investment objective to generate optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and money market securities.

Birla Sun Life MF declares dividend For Interval Fund

Record date for dividend is 3 March 2009

Birla Sun Life Mutual Fund has announced dividend in the dividend option of Birla Sun Life Quarterly Interval Fund-Series 1 The fund house has planned to offer 100% of distributable surplus as dividend on the record date of 3 March 2009 at face value of Rs 10 per unit.

The scheme recorded a NAV of Rs 10.1962 per unit as on 25 February 2009.

Birla Sun Life Quarterly Interval Fund-Series 1 is an interval income scheme with an investment objective to generate regular income through investments in debt and money market instruments.

The Fund does not charge an entry load while it charges 1% exit load for redemptions done other than specified transaction period. For redemption made on specified transaction period, exit load is nil.

Sahara MF appoints new fund manager

With effect from 27 February 2009

Devesh Thacker is being appointed as fund manager (debt) with effect from 27 February 2009 in place of Puneet Srivastava for the debt oriented schemes namely Sahara Liquid Fund, Sahara Income Fund, Sahara Gilt Fund, Sahara FMP 395 days series 2, Sahara FMP 395 days series 3, Sahara Classic Fund, Sahara Interval Fund Quarterly Plan Series 1 and Sahara Short Term Bond Fund.

Deutsche MF appoints CIO

With effect from 19 February 2009

Aniket Inamdar, the Head of Domestic Equity of Deutsche Asset Management (India) has been appointed as the Chief Investment Officer (CIO) of the company with effect from 19 February 2009 and will continue as the fund manager for the following schemes of DMF i.e. DMS Alpha Equity Fund, DWS Tax Saving Fund, DWS Investment Opportunity Fund and as Co-Fund Manager of DWS Global Thematic Offshore Fund.

JM Financial MF announces change in key personnel

With effect from 25 February 2009

JM Financial Mutual Fund has announced the change in the key personnel of AMC. Sandip Sabharwal ceases to be key personnel of the AMC. The schemes managed by him will now be managed by the existing equity fund management team.

Asit Bhandarkar shall be the fund manager of the JM Cor 11 Fund – Series 1 and JM Emerging Leaders Fund, Sanjay Chhabaria shall be the fund manager for JM Multi Strategy Fund, Sandeep Neema shall be the fund manager for JM Tax Gain Fund and JM Contra Fund will be managed jointly by Sandeep Neema and Sanjay Chhabaria.

UTI SPrEAD Fund introduces SIP & Dividend Payout facility

With effect from 16 February 2009

UTI Mutual Fund has introduced the Systematic Investment Plan (SIP) and Dividend Payout facility under UTI SPrEAD Fund, with effect from 16 February 2009.

The scheme has introduced the dividend payout facility under divided option. The existing investors of dividend option will continue to be under dividend option-reinvestment facility of the scheme on or after 16 February 2009.

Systematic Investment Plan (SIP) is introduced under the scheme. The SIP is offered with Monthly SIP (MSIP) and Quarterly SIP (QSIP). Both the options can not be combined. A separate enrollment form needs to be filled in for MSIP and QSIP. SIP Mandate form can be submitted at least 1 month before the firs SIP installment date. The forms that are received within the period of 1 month before the first SIP installment date, will be considered from the SIP date of the following month/ quarter, as per the date (1st/7th/15th/25th) opted by the investor.

The load applicable under SIP is the same as for regular investment i.e. no entry load. The exit load of 0.75% will be charged for the investment amount less than Rs 2 crore is redeemed on or before 180 days. And 0.50% of exit load will be charged for the investments greater than or equal to Rs 2 crore, if redeemed on or before 25 days.

The minimum amount of each investment for SIP is Rs 500 (for monthly option) and Rs 1500 (for quarterly option) and in multiples of Re 1.

The scheme is an open ended equity fund investing in a mix of equity, equity derivatives, debt and money market instruments. The investment objective of the Fund is to provide capital appreciation and dividend distribution through arbitrage opportunities arising out of price difference between cash and derivative market by investing predominantly in equity and equity related securities, derivatives and the balance option in debt securities.

UTI CCP Advantage Fund revises the load structure for SIP

With effect from 26 February 2009

UTI Mutual Fund revised the load structure for investment routed through Systematic Investment Plan (SIP) under UTI CCP Advantage Fund, with effect from 26 February 2009.

As per the revision, the load structure for the monthly investment upto Rs 3000 and quarterly investment upto Rs 12000 through route of SIP will be as follows:

The scheme will not charge an entry load.

The exit load of 5% will be charged if exited within 2 years from the date of acceptance of each installment. It will charge load of 2.00% if exited on a date on or after 2 years and before 4 years from the date of each installment. 1.00% exit load will be asked if exited on a date on or after 4 years and before 5 years from the date of installments and nil if exited on or after 5 years form the date of each installment.

The load structure for monthly installments greater than Rs 3000 and quarterly installments greater than Rs 12000 through SIP and all investments routed through other than the SIP will attract the existing load structure. The existing load structure is as follows:

The scheme will charge an entry load of 2.25%. The exit load of 4.00% will be charged if redeemed within 1 year. If redeemed between 1 to 3 years, 3.00% of exit load will be charged. It will ask 1.00% of exit load if redeemed between 3 to 5 years and nil after 5 years.

Gold drops as recent momentum fades away

Yellow metal still above 15000 on MCX but profit selling continues

Gold slipped sharply yet again as a dismal week continued for the commodity as the momentum generated by the prices around $1000 mark was seemingly fading away. Despite much of negatives on the usual suspects side i.e. US dollar and crude oil and plenty of positives on the physical demand-supply side, with total gold production in South Africa falling by a significant 13.6 percent to 220 127 kilograms in 2008 - the lowest level of production since the 218 031 kilograms produced in 1922, the yellow metal failed to take a lift.

COMEX Gold slumped to a low of $937 per ounce and currently trades at $940.60, down $25.60 per ounce. MCX Gold futures are still finding a very good support around Rs 15200 levels. The April Gold trades at s 15237, down Rs 276 per 10 grams or 1.80% from the previous close. The open interest is down 3.70% so far, indicating persistent profit selling.

Crude shoots substantially

Prices end higher after inventory report shows more usage of gasoline

Oil prices shot up on Wednesday, 25 February, 2009. Prices rose after energy department reported in its weekly inventory report that gasoline inventories dropped during last week. Prices also rose after OPEC spoke yesterday about another production cut in coming months.

On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $42.5/barrel (higher by $2.54 or 6.4%) on the New York Mercantile Exchange. Last week, crude ended higher by 3.8%.

Prices reached a high of $147 on 11 July, 2008 but have dropped almost 68% since then. Year to date, in 2009, crude prices are lower by 1.5%. On a yearly basis, crude prices are lower by 62%.

EIA reported today that crude inventories rose by 700,000 barrels to 351.3 million during last week. Market had expected a rise of more than 2 million barrels. Total products supplied over the past four weeks, including gasoline, diesel and jet fuel, averaged 19.7 million barrels per day, down 0.8% from a year ago. Excluding jet fuel, total products supplied rose slightly.

EIA also reported that U.S. gasoline consumption during the past four weeks rose 1.7% from a year ago. Gasoline inventories fell by 3.4 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 800,000 barrels. The EIA also said in the report U.S. refineries operated at 81.4% of their operable capacity last week, down slightly from the previous week.

Prices had been sliding since past couple of months after fear gripped the US economy that US banks might be nationalized.

OPEC has been trying to cut production consistently in order to step up prices from their current low levels. As per reports during the last weekend, Algerian Energy Minister Chakib Khelil said that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.

Against this background, March reformulated gasoline rallied 7.5% to $1.166 a gallon, while March heating oil rose 3% to $1.2439 a gallon.

March natural gas futures fell 0.5% to $4.213 per million British thermal units.

Recently, Paris based, IEA has reported that this year's global oil demand will fall by 1 million barrels a day, or 1.1%, from last year. If realized, it will be the biggest yearly drop since 1982. The IEA cited a worsening economic outlook across all regions as the reason for the weakness in oil demand.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for March delivery closed at Rs 2,111/barrel, higher by Rs 179 (9.2%) against previous day's close. Natural gas for February delivery closed at Rs 203.4/mmbtu, lower by Rs 2/mmbtu (0.97%).

Inflation at lowest level in nearly 15 months

At 3.36% in 12 months to 14 February 2009

Inflation based on the wholesale price index rose 3.36% for the year through 14 February 2009, much lower than previous week's annual rise of 3.92%, data released by the government today, 26 February 2009, showed. It was the lowest rate of rise in inflation in nearly 15 months

In stark contrast to a solid surge in 2008, inflation has been declining sharply in the new year calendar 2009. The market has been agog with expectations of rate cut by the Reserve Bank of India (RBI). The sharp fall in inflation has provided room for the Reserve Bank of India (RBI) to cut interest rates further to support faltering economic growth.

As per reports, RBI governor D Subbarao will meet select heads of banks on Friday, 27 February 2009, to hold discussions on issues like credit flow and liquidity conditions.

The global financial sector crisis and recession in key global economies have pushed economic growth in India down to a six-year low. The Central Statistical Organisation (CSO) has pegged India's projected GDP growth for the year ending March 2009 at 7.1%, the slowest in six years and below the previous year's 9% rise. Global rating agency, S&P, however, feels that India's medium term growth prospects remain strong.

source: Capital Market

SEBI to join global regulators group

India will soon join the high table of top securities regulators, including those from the US, the UK, France and Germany.

In recognition of the strides made by India in terms of creating an enhanced regulatory structure, International Organization of Securities Commissions (IOSCO), a global policy forum for securities regulators, based in Spain, has invited the Indian capital market regulator, the Securities and Exchanges Board of India (SEBI), to join its technical committee. SEBI will join the committee at its next meeting in June.

India is currently a member of the Emerging Markets Committee of IOSCO and by the latter’s recent decision, it will join 15 key decision-making members.

The IOSCO membership will enable a two-way exchange of experiences in regulating markets between Sebi and other members with a view to promoting development of domestic bourses and making a united effort to establish an effective surveillance of international securities transactions.

It will also enable SEBI and other members to promote the integrity of the markets by a rigorous application of the standards and by effective enforcement against offences.

Apart from SEBI, regulatory authorities from Brazil and China have also been invited to take up membership of the technical committee.

Kathleen Casey, chairman of IOSCO’s technical committee, said, “The changing landscape of the international financial system in this time of crisis demands that organisations, such as ours, reflect such changes in the composition of its membership. It is quite proper that the technical committee now should include members from India, Brazil and China within its ranks.”

The new members were chosen on the basis of the size of their capital markets, the international nature of their markets and the development of their regulatory system and authority.

source: Economic Times

News Flash

India's Inflation Rate Slows to a 14-Month Low as Economic Growth Weakens India’s inflation slowed to a 14- month low amid weaker economic growth, making it more likely the central bank will cut interest rates. Bonds rose.

Daiichi Sankyo, Ranbaxy Fall After U.S. Halts Reviews on Falsehood Claim Daiichi Sankyo Co., Japan’s third- largest drugmaker, fell to a record low in Tokyo and its unit Ranbaxy Laboratories Ltd. declined in Mumbai after U.S. regulators said they’ll stop evaluating new products made at one plant of India’s biggest maker of medicines.

Tata Motors to Start Accepting Bookings for World's Cheapest Car in April Tata Motors Ltd., the maker of Jaguar and Land Rover luxury vehicles, will start accepting bookings for the Nano, the world’s cheapest car, in the second week of April.

Tata Consultancy Services to Freeze Pay Next Fiscal Year, May Cut Jobs Tata Consultancy Services Ltd., India’s largest computer-services provider, will freeze pay in the fiscal year starting April 1, and may cut jobs if the economic situation deteriorates, a company spokesman said.

Stocks in India Gain for Second Day; Reliance Industries, Tata Motors Rise Indian stocks rose, reversing earlier losses, led by Tata Motors Ltd., the nation’s biggest truck-maker, after it announced the launch of a long-awaited new small car.

Spicejet Plans Airline for Indian Regional Routes as Travel Demand Grows SpiceJet Ltd., the Indian discount carrier backed by billionaire Wilbur Ross, plans to set up an airline connecting smaller cities in the country to lure rail passengers.

Indian Central Bank Has Acted Aggressively to Protect Economy, Bansal Says The Reserve Bank of India has acted aggressively to protect the economy from the adverse impact of the global economic meltdown, junior finance minister Pawan Kumar Bansal said today.

Rupee Closes at Record Low as Global Slump Spurs Outflows, Hurts Exports India’s rupee fell to a record closing low versus the dollar as a deepening global economic slump damped demand for the nation’s assets and exports.

Obama's Budget Proposes Up to $750 Billion in New Financial Industry Aid President Barack Obama’s first budget request would provide as much as $750 billion in new aid to the financial industry, as well as overhaul the U.S. health-care system and launch a program to cut carbon-dioxide emissions.

Stocks in U.S. Gain on Obama Budget; JPMorgan, Citigroup, Wells Fargo Rise U.S. stocks rose, recouping yesterday’s losses, after President Barack Obama’s budget proposed as much as $750 billion in new aid for the financial industry.

UBS Replaces Rohner With Former Credit Suisse Chief Gruebel; Shares Rally UBS AG hired Oswald Gruebel to replace Marcel Rohner as chief executive officer, tapping a veteran banker who turned around Credit Suisse Group AG, to restore investor confidence eroded by record losses and a U.S. tax scandal.

GM Reports $30.9 Billion Annual Loss as Wagoner Seeks New Loans From U.S. General Motors Corp. reported a $30.9 billion annual loss, the second-biggest in its 100-year history, as Chief Executive Officer Rick Wagoner prepared to ask the Treasury for more cash to survive through 2009.

U.S. New Home Sales Drop to Record Low as Job Losses, Foreclosures Mount Sales of new homes in the U.S. plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away.

AIG May Take Auto-Insurance Unit Off Market as Zurich Financial Pulls Bid American International Group Inc., the insurer selling units to repay a government loan, may pull its U.S. auto unit from the market after Zurich Financial Services AG withdrew an offer, two people familiar with the matter said.

RBS Will Place $462 Billion of Assets Into U.K. Government Insurance Plan Royal Bank of Scotland Group Plc will put 325 billion pounds ($462 billion) of investments into a state insurance program and shift toxic assets to a new unit after posting the biggest loss in British history.

source: Bloomberg

Kotak MF declares dividend for quarterly interval plan

Record date for dividend is 2 March 2009

Kotak Mutual Fund has declared dividend under dividend option of Kotak Quarterly Interval Plan -Series 7. The fund house has decided to distribute up to 100% distributable surplus as dividend on the record date 2 March 2009 on the face value of Rs 10 per unit.

The scheme recorded a NAV of Rs 10.1903 per unit as on 19 February 2009. The specified transaction period is on 2 March 2009.

Kotak Quarterly Interval Plan -Series 7 is an interval debt scheme with an investment objective to generate returns by investing in debt and money market instruments with a view to significantly reduces the interest rate risk.

UTI MF declares dividend under Fixed Income Interval Fund

Record date for dividend is 4 March 2009

UTI Mutual Fund has announced dividend under dividend option of UTI Fixed Income Interval Fund-Series II-Quarterly Interval Plan VI. The record date for the declaration of dividend is 4 March 2009.

The quantum of dividend will be 100% of distributable surplus available on the record date on face value of Rs. 10 per unit. The NAV for the scheme for both retail and institutional plan was at Rs. 10.1970 per unit on 24 February 2009.

UTI Fixed Income Interval Fund- Series II-Quarterly Interval Plan VI is a debt oriented interval scheme with income-oriented portfolio consisting G-sec and other fixed income and debt securities. The investment objective of the scheme is generating regular income by investment in a portfolio of fixed income securities normally maturing in line with the time profile of the plan.

Mohit Verma resigns JM Financial MF

With effect from 25 February 2009

Mohit Verma, Chief Investment Officer (Debt) and Fund Manager of JM Short Term Fund, JM Income Fund and JM G-Sec Fund has resigned from the services of JM Financial Asset Management.

Shalini Tibrewala shall be the fund manager for the schemes managed by Mohit Verma. The change will be effective from 25 February 2009.

ICICI Pru MF revises minimum application amount

With effect from 27 February 2009

ICICI Prudential Mutual Fund has announced the revision of minimum application amount under ICICI Prudential Floating Rate Plan- Plan B, ICICI Prudential Long Term Floating Rate Plan – Plan A, Plan B and Plan C, with effect from 27 February 2009.

As per revision, the minimum application amount for under ICICI Prudential Floating Rate Plan- Plan B & ICICI Prudential Long Term Floating Rate Plan – Plan A will be Rs 15,000 and in multiples of Re 1 thereafter. And under ICICI Prudential Long Term Floating Rate Plan – Plan B and Plan C the minimum application amount will be Rs 10 lakh and Rs 1 crore respectively, and in multiples of Re 1 thereafter.

ICICI Prudential MF revises exit load

With effect from 27 February 2009

ICICI Prudential Mutual Fund has approved revision in the exit load structure of ICICI Prudential Floating Rate Plan A and ICICI Prudential Long Term Floating Rate Plan A, B and C, with effect from 27 February 2009.

Accordingly, under ICICI Prudential Floating Rate plan A, for an investment up to Rs 1 crore the scheme will levy 2.75% of exit load if the amount, sought to be redeemed, is invested upto 2 years from the date of allotment and nil if the amount to be redeemed, is invested for more than 2 years from the date of allotment. The scheme will not levy any exit load for the investment above Rs 1 crore.

The exit load of 2.75% will be charged for Systematic Transfer Plan (STP) out of this scheme into ICICI Prudential Growth Plan, ICICI Prudential Index Fund, ICICI Prudential Tax Plan, and ICICI Prudential Equity & Derivative Fund - Income Optimiser Plan. It will be nil for STP out of this scheme to equity scheme of the fund other than those mentioned above. And exit load of 2.75% will be charged for switch out from this scheme into ICICI Prudential Growth Plan, ICICI Prudential Index Fund, ICICI Prudential Tax Plan, and ICICI Prudential Equity & Derivative Fund - Income Optimiser Plan the institutional option and for Systematic Transfer Plan (STP) out of retail option of the scheme and all debt schemes of the fund.

Under ICICI Prudential Long Term Floating Rate Plan A and Plan B, the scheme will levy 4.00% of exit load if the amount, sought to be redeemed or switched out, is invested upto 13 months from the date of allotment and nil if the amount to be redeemed or switched out, is invested for more than 13 months from the date of allotment. The scheme will not levy any exit load for Plan C.

ICICI Prudential MF revises exit load under Opportunities Fund

With effect from 27 February 2009

ICICI Prudential Mutual Fund has approved revision in the exit load structure under retail option of ICICI Prudential Opportunities Fund, with effect from 27 February 2009.

In case of Systematic Transfer Plan (STP) and switch out from this scheme, into ICICI Prudential Growth Plan, ICICI Prudential Index Fund, ICICI Prudential Tax Plan, and ICICI Prudential Equity & Derivative Fund - Income Optimiser Plan and all other ICICI Prudential debt schemes of fund the exit load of 2.5% of the applicable NAV will be charged. It will be nil for STP and switch out of this scheme to equity scheme of the fund other than those mentioned above.

ICICI Prudential Blended Plan announces various changes

With effect from 27 February 2009

ICICI Prudential Mutual Fund has approved changes in the minimum application amount and exit load structure under ICICI Prudential Blended Plan, with effect from 27 February 2009.

Accordingly, under ICICI Prudential Blended Plan – Plan B (Institutional Option) the minimum application amount will Rs 500 and in multiples of Re 1 thereafter, additional purchase amount will be Rs 100 and in multiples of Re 1 thereafter and minimum redemption amount will be Rs 100 and in multiples of Re 1 thereafter.

Hereafter, the ICICI Prudential Blended Plan – Plan B (retail and institutional option) will charge an entry load of 1.50%. It will charge an exit load of 1.50% if the amount, sought to be redeemed or switched out, is invested for a period of upto 12 months from the date of allotment. No exit load will be charged if the amount sought to be redeemed or switched out, is invested for a period of more than 12 months from the date of allotment.

ICICI Prudential Blended Plan – Plan B is an open ended fund investing in a blend of equity, derivatives, debt and money market instruments under two plan viz. plan A and plan B, with the objective of plan B under the scheme is to provide capital appreciation and income distribution to unitholders by investing predominantly in debt securities and the balance portion in equity and equity related securities including derivatives.

HDFC MF revises load structure for Short Term Plan

With effect from 2 March 2009

HDFC Mutual Fund has decided to revise the load structure for HDFC Short Term Plan, with effect from 2 March 2009.

Accordingly, the revised exit load will be 0.50% for each purchase / switch in of units less than Rs 1 crore value, is redeemed / switched out within 3 months from the date of allotment and 0.25% of exit load is payable for each purchase / switch in of units equal to or greater than Rs 1 crore value, is redeemed / switched out within 1 month from the date of allotment.

At present, the scheme charges 0.50% for each purchase / switch in of units, is redeemed / switched out within 3 months from the date of allotment.

HDFC Short Term Plan is an open ended income scheme with an investment objective to generate regular income through investment in debt securities and money market instruments.

Crude glides up

Prices end higher after OPEC hints at another production cut

Oil prices shot up on Tuesday, 24 February, 2009. Prices rose after OPEC spoke about another production cut in coming months. Prices also rose today in synchronization with the rise in stocks at Wall Street.

On Tuesday, crude-oil futures for light sweet crude for April delivery closed at $39.96/barrel (higher by $1.52 or 4%) on the New York Mercantile Exchange. Last week, crude ended higher by 3.8%.

Prices reached a high of $147 on 11 July, 2008 but have dropped almost 74% since then. Year to date, in 2009, crude prices are lower by 7.9%. On a yearly basis, crude prices are lower by 68%.

In Wall Street on Tuesday, US stocks bounced back. Couple of strong earning reports from retailers and news percolating that Microsoft might still be interested in a deal with Yahoo gave US stocks a much needed strong boost today.

Prices had been sliding since past couple of days after fear gripped the US economy that US banks might be nationalized. The gear eased a bit after President Barack Obama said that he is in favour of “privately owned” banks.

OPEC has been trying to cut production consistently in order to step up prices from their current low levels. As per reports during the weekend, Algerian Energy Minister Chakib Khelil said that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.

Against this background, March reformulated gasoline rose 3.9% to $1.0837 a gallon and March heating oil added 2.8% to $1.2082 a gallon.

Natural gas for March delivery rose 3.3% to stand at $4.236 per million British thermal units.

Recently, Paris based, IEA has reported that this year's global oil demand will fall by 1 million barrels a day, or 1.1%, from last year. If realized, it will be the biggest yearly drop since 1982. The IEA cited a worsening economic outlook across all regions as the reason for the weakness in oil demand.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed at Rs 1,932/barrel, lower by Rs 26 (1.3%) against previous day's close. Natural gas for February delivery closed at Rs 205.4/mmbtu, higher by Rs 1.4/mmbtu (0.7%).

source: Capital Market

Gold rebounds from days low

Yellow metal rises on ideas recent selling overdone

Gold found a support around $950 an ounce mark after witnessing a feverish spell of profit sales earlier in the day. The commodity continued to ease for a second day as the retreat from $1000+ levels extended amid a favorable scenario for the global equities. The COMEX gold futures for April hit a low of $952.20 per ounce before traders begin to enter long.

The metal dipped despite a weakness in the US dollar, as, for the first time in the last few days, the momentum seemed to be turning bearish for the yellow metal. Traders questioned the sustainability of the $1000+ levels from the point of view of the retail investment demand, which is set to take a hit amid a worldwide recession and negative wealth effects from the global equities and other asst market turmoil.

However, the dollar pared most of its losses. The currency has risen in the last few hours against the Pound and the Euro, the bad UK GDP data looks too heavy for the European currencies, the GBP/USD has fallen more than pips and the EUR/USD also fell by nearly 100 pips in the European session.

COMEX Gold, however, went up on ideas recent selling was overdone and currently trades at $958.50, down $11 per ounce from the previous close. The counter fell $25.5 or 2.6% to close at $969.1 an ounce on the New York Mercantile Exchange yesterday, coming off nearly one-year highs.

MCX Gold futures plummeted to a low of Rs 15210 before rebounding. The April MCX futures currently trade at Rs 15340, down Rs 144 or 0.93% from the previous close.

source: Capital Market

News Flash

India May Buy Record Wheat as Above Market Price Lures Farmers Before Poll India, the world’s second-biggest wheat producer, expects to make record purchases of the grain as domestic farmers take advantage of above market prices assured by the government for their crops.

Monnet Group Offers to Buy Orissa Sponge, Topping Bid by Rival Steelmaker Mounteverest Trading & Investment Ltd., part of India’s Monnet Group, has offered to acquire 20 percent of Orissa Sponge Iron & Steel Ltd. at 310 rupees ($6.2) each, countering a bid by a rival steelmaker.

Sugar Mills in Uttar Pradesh Shutter as Cane Supplies Dwindle on Poor Crop Sugar mills in Uttar Pradesh, India’s second-biggest producer, have shuttered as a smaller sugar cane crop reduces supplies of the main raw material, an official said.

Rupee Weakens a Third Day on Speculation Some Importers Purchased Dollars India’s rupee weakened for a third day on speculation companies bought dollars to settle import bills before the end of the month.

Power Grid to Borrow $2 Billion From World Bank, ADB for Network Expansion Power Grid Corp., India’s biggest electricity transmitter, is seeking to borrow as much as $2 billion for its network expansion, company officials said.

Stocks in India Climb, Snapping Two-Day Drop, on U.S. Assurances on Banks Indian stocks rose, with the key index snapping a two-day 2.4 percent drop. Infosys Technologies Ltd. led software exporters higher after assurances on the health of U.S. banks, which are among their biggest customers.

Regulator Eases Indian Takeover Rules, Paving Way for Satyam Computer Sale India amended takeover rules for companies where the government replaces the board to save them from collapse, paving the way for Satyam Computer Services Ltd.’s state-appointed board to sell a stake to a strategic investor.

U.S. Home Resales Fall to 4.49 Million Rate as Buyers See More Price Drops Sales of previously owned U.S. homes unexpectedly declined in January even as falling prices made them more affordable, signaling that the housing slump is further from a bottom than previously estimated.

Bernanke Tells Congress U.S. Doesn't Plan `Anything Like' Nationalization Federal Reserve Chairman Ben S. Bernanke said the U.S. government doesn’t plan “anything like” a nationalization of banks that would wipe out stockholders.

Stocks in U.S. Retreat as Insurers Slash Dividends, Home Resales Decline U.S. stocks fell, erasing about a quarter of yesterday’s rally, as dividend cuts triggered a selloff in insurers and an unexpected drop in home sales spurred concern the credit crisis is deepening.

Moelis Will Hire Former UBS Credit Chief Ryan to Advise Companies on Risk Christopher Ryan, the former head of credit fixed income at UBS AG is close to joining Moelis & Co., according to two people familiar with the plan.

Agrium Makes Unsolicited $3.6 Billion Bid for CF to Boost Fertilizer Sales Agrium Inc., the largest U.S. supplier of seeds, fertilizer and pesticides, made an unsolicited $3.6 billion bid for CF Industries Holdings Inc. to triple capacity for making phosphate and nitrogen crop nutrients.

Recession in U.K. May Intensify `Significantly,' BOE's Blanchflower Says Bank of England policy maker David Blanchflower said the U.K. recession may intensify “significantly” and it’s too early to gauge when the economy will start to recover.

Nacchio Conviction Reinstated by U.S. Appeals Court in Qwest Insider Case The insider-trading conviction of Joseph Nacchio, Qwest Communications International Inc.’s former chief executive officer, was reinstated by a federal appeals court in Denver.

source: Bloomberg

Canara Robeco MF declares dividend under Interval Series

Record date for dividend is 2 March 2009

Canara Robeco Mutual Fund has announced 2 March 2009 as the record date for declaration of dividend under dividend option of Canara Robeco Interval Series -2 Quarterly Plan – 1 for both retail and institutional plan.

The fund house has decided to distribute 100% of distributable surplus for both above mentioned interval funds.

The NAV of the retail and institutional plan of Canara Robeco Monthly Interval Fund was at Rs 10.2245 & Rs 10.2316, respectively as on 20 February 2009.

Investment objective of the scheme is to generate returns and growth of capital by investing in central and state government securities and other fixed income/ debt securities normally maturing within the maturity of interval plan to insulate the portfolio from interest rate volatility.

Edelweiss MF declares dividend for Monthly Interval Fund

Record date for dividend is 2 March 2009

Edelweiss Mutual Fund has declared dividend under dividend option of Edelweiss Monthly Interval Fund – Series 1. The record date for the dividend is 2 March 2009.

The quantum of dividend will be 100% of the available distributable surplus of the scheme as on the record date for the face value of Rs 10 per unit. The NAV for the scheme was at Rs 10.0413 per unit as on 19 February 2009.

After payment of dividend, the NAV will fall to the extent of the payout and statutory levy, if any.

The investment objective of Edelweiss Monthly Interval Fund – Series 1 is to generate regular income through investments in debt & money market instruments.

ING MF ceases High Yield Liquid Fund

With effect from 25 February 2009

ING Mutual Fund has wound up ING High Yield Liquid Fund, with effect from 25 February 2009. Since the scheme is not able to meet with the requirement of minimum of 20 investors. Accordingly, the fund house wound up the scheme under regulation 39 (2) (c) of Sebi Regulation, 1996.

The fund house ceased to carry any business activities in respect of the scheme. It has also ceased to issue units in the scheme and has also ceased to create or cancel units in the scheme.

ICICI Prudential MF declares dividend For QIP

Record date for dividend is 2 March 2009

ICICI Prudential Mutual Fund has declared dividend under the dividend option of ICICI Prudential Interval Fund IV-Quarterly Interval Plan-A. The fund house has decided to distribute dividend upto 100% the distributable surplus of the scheme on the face value of Rs 10 per unit as dividend on the record date of 2 March 2009.

The scheme recorded a NAV of Rs 10.1815 per unit under the retail option of as on 19 February 2009.

ICICI Prudential Interval Fund I - Quarterly Interval Plan-A is a debt oriented interval scheme with an investment objective to generate optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and money market securities.

ICICI Prudential MF declares dividend For IPFMP-46-1YB

Record date for dividend is 2 March 2009

ICICI Prudential Mutual Fund has declared dividend under the dividend option of ICICI Prudential Fixed Maturity Plan- Series 46-One Year Plan B (IPFMP-46-1YB). The fund house has decided to distribute 100% distributable surplus as dividend as on the record date of 2 March 2009 on the face value of Rs 10 per unit.

The scheme recorded a NAV of Rs 10.667 per unit under retail option as on 18 February 2009 (published only once a week i.e. every wednesday).

IPFMP-46-1YB is a close ended debt fund with an objective to seek to generate returns by investing in a portfolio of fixed income securities/debt instruments normally maturing in line with the time profile of the scheme.

Fortis MF extends NFO closing date

NFO will now close on 20 March 2009

Fortis Mutual Fund has extended the closing date of New Fund Offer (NFO) period of Fortis Fixed Term Plan – Series 14 C to 20 March 2009 instead of 16 March 2009. The NFO was opened for subscription on 19 February 2009.

Fortis Fixed Term Plan - Series 14- Plan C is a close-ended income scheme launched with an objective is to achieve growth of capital through investments made in a basket of fixed income securities in line with the duration of the scheme.

HDFC MF declares dividend in HDFC FMP 90D November 2008 (4)

Record date for dividend is 2 March 2009

HDFC Mutual Fund has announced dividend under the dividend option of retail and wholesale plan of HDFC FMP 90D November 2008 (4), a fixed maturity plan under HDFC Fixed Maturity Plans-Series X, a close-ended income scheme.

The fund house has decided to distribute 100% of distributable surplus as on the record date of 2 March 2009 on the face value of Rs 10 per unit as dividend.

The scheme recorded a NAV of Rs 10.2080 per unit under the retail plan and Rs 10.2102 per unit under wholesale plan as on 20 February 2009.

The investment objective of the scheme is to generate regular income through investments in debt/money market instruments and government securities.

Fortis MF announces changes in minimum application amount

With effect from 2 March 2009

Fortis Mutual Fund has announced the changed in minimum application amount for Fortis Flexi Debt Fund under regular plan and regular plan A, with effect from 2 March 2009.

Accordingly, the scheme proposed minimum application amount under Growth, Half-yearly dividend, Quarterly dividend, Weekly dividend and Daily dividend options as Rs 5000 per application and in multiples of Re 1 thereafter.

Existing minimum application amount under Growth option is Rs 5000 per application and in multiples of Re 1 thereafter. Under Half-yearly dividend and Quarterly dividend option the minimum application amount is Rs 20,000 per application and in multiples of Re 1 thereafter. And under Weekly dividend and Daily dividend option it is Rs 1 lakh and Rs 10 lakh per application respectively and in multiples of Re 1 thereafter.

Aviva India Launches New Child Plan

Aviva Young Scholar Plan - A plan to secure your child's future

Aviva Young Scholar Plan is a non-participating unit-linked endowment plan that has been specially designed keeping in mind your specific needs as a parent. As parents, you are fully aware of the importance of good education.

Good education helps greatly to pave the way for a young person in the adult world. Unfortunately, the cost of quality education, particularly higher education, can be burdensome. So you need to plan ahead for your child's future. This plan enables you to create wealth that your child will require for important milestones in his life and also ensures that the same is made available to him even if you are not around.

The Plan-


Charges -



Premium Allocation Charge (100% - Allocation Rate):

Regular Premium:
Allocation Rates for policies with premium payment term equal to policy term:


Allocation rate for policies with premium payment term of 3 or 5 years:



On Monthly and Quarterly frequency, Allocation Rate will reduce by 1% across all premium slabs.

Top-up premium: The allocation rate shall be 98% of top-up premium.

Fund Management Charge (FMC):

FMC will be applied on the fund while calculating NAV on a daily basis. It can be increased to a maximum of 2% p.a., subject to prior approval by IRDA.




Policy Administration Charge:

Policy administration charge will be Rs. 55 per month irrespective of the premium paid. It will be deducted by monthly cancellation of units from the unit account. This charge will increase from 1st January every year by 5%.

Mortality Charge:

It is levied on the Sum at Risk (SAR) by monthly cancellation of units from the unit account. Sum at Risk is defined as Sum Assured plus sum of future premiums payable till the date of maturity. Sample annual charges per thousand SAR for a healthy male are given below:


Rider Charge:

The rider charge will be made by monthly cancellation of units from the policy unit account. The ADB, CHB and IB rider charges will apply on their respective Sum Assured figures. The rider charge may change with prior approval by the IRDA.

Switching Charge:

There are no charges on the first 4 switches in a policy year; subsequent switches are charged at 0.5% of amount switched, subject to a maximum of Rs. 500 per switch.

Surrender Charge

Consult for surrender charge & other details